5 Things To Consider When Defining Competitors For Price Monitoring
Сompetitive Pricing Analysis
E-commerce retail market is highly competitive, so a Category Manager is engaged with general strategies to counteract the activities of competitors. According to the latest PWC research, price is the key factor of a purchasing decision. Well, let’s make the best use of competitive pricing intelligence.
Surely, while making a competitor’s analysis you are guided by the following points:
- Detect the competitors actually affecting your sales.
- Find your price positioning towards market price/competitors’ prices.
- Sell some products at a higher price without a loss of profit.
- Define the most sensitive product categories to each of the competitors’ changes.
- Save the time and improve my workflow tracking competitors.
Сompetitor’s price analysis should solve these tasks ultimately. Does it not?
Competitive price monitoring is the process of monitoring, NOT of all the competitors. You approximately considered the competitors of your online store, but you still have doubts about the way of defining competitors, is it not?
To define the number of competitors, you need to find the assortment intersections in your and your competitors’ online stores. You should care only about price-sensitive products, product groups, and categories, which your customers could prefer at competitor’s store. Competitors’ price tracking tool compares and analyzes the quantity of similar products available at your, and your competitors’ stores.
2 key criteria to define competitors for price monitoring:
- Common product assortment availability.
- Comparable price positioning of certain products, groups and categories.
For optimal price monitoring you should focus on two or three competitors according to the listed parameters.
Competitors Analysis Results
The visualization is important. You can make the graph of price positioning of your products, categories, leading brands, and a whole assortment of your online store due to similar parameters of the competitors.
WHY? You will know precisely which of the competitors, and how intensively, influence your sales during a certain period of time.
HOW? Search the Price Index diagrams to clarify the current market situation and your positioning towards competitors at the moment.
If you have a visible graphic of your price positioning of the products, you can change the prices in order to achieve the maximum profit. Is it possible to raise the price while increasing margins and staying attractive in customers’ eyes?
Imagine, you know your competitor has no product in stock today, or his price is higher than your’s. Does it make sense to keep a low price? The customer will choose your online store by parameter “optimal price” and you are going to win everything: increase margins, ease the stock, and beat the competitor.
How can I know how much I need to raise a price at the moment? You can know for sure when and which prices need change with help of price tracking tools. The repricing takes 15 min per day.
Tricky Competitive Product Assortment
Surely, it is not enough to collect data on competitors’ prices for a fully comprehensive competitive intelligence. You need to know which product categories are the most price-sensitive to each of the competitors’ changes.
Identify the KVC’s (key value categories) by following the formula:
- 40% frequency of purchase
- 40% customer reach
- 20% promotional share
Than you can define the KVI’s (key value items) with the help of big data and advanced analytical models.
Step 1: identify SKUs that are a ‘good deal’ (represent good value for money for customers). Turn attention to either cheap SKU’s relative to the category and the items with a low per-unit price.
Step 2: select the customers buying ‘good deal’ SKUs more often than others. These customers remember the prices of purchasing products. Check them using transaction analysis or loyalty-card data.
step 3: analyze the transactions to find the price-sensitive items often appearing in baskets of price sensitive customers.
Category manager uses product assortment intelligence to track the inventory and product supply of competitors, and manage the own product assortment. Tracking the price-sensitive products online store can achieve the competitive advantage.
The Assortment Intelligence solution makes sense if it really turns retail assortment planning and gap analytics into something automatic, saving time and achieving KPI’s. Retail price optimization and product assortment planning are daily tasks for Category Managers.
You can achieve everything listed above and optimise your own workflow towards rapid time saving performance. According to last Competera research Price Intelligence optimises Category Manager’s workflow saving 1 full working hour per day, i. e. 20 hours per month, i. e. 30 whole working days for the Category Manager within a year.